Given the industry debate that has been sparked by the European Commission’s agreement with Standard & Poor’s for the vendor’s Cusip Global Services (CGS) business to cut the fee it charges European customers to receive ISINs for US securities, Reference Data Review catches up with Darren Purcell, European director for CGS, to find out the vendor’s perspective.
The deal that has been struck thus far involves S&P’s Cusip Global Services (CGS) business cutting the fee it charges European customers to receive ISINs for US securities. Although the data vendor continues to “strongly disagree” with the EC’s ruling that it is abusing its dominant market position with regards to charging for ISINs, it has agreed to take steps to address these concerns and thus has set a limit of an annual charge of US$15,000 for European firms and other data vendors (for redistribution purposes) to receive US ISIN record masterfile data in a new standalone format (with no “additional data” included). The vendor indicates it would also no longer charge firms that opt to source ISINs directly from other rival information vendors.
These steps would be taken within the next five months and would be applicable over the next five years, dependent on the vendor continuing to operate as the US National Numbering Agency (NNA), of course. Within a month, CGS’ customers would also have the option to early termination of their customer agreements, which would come into effect the same date as the introduction of the new ISIN service.
Purcell explains of the impact that this move will have on the CGS business in the short and long term: “In the long term it will allow us to serve the unique, regional needs of European institutions that only require the limited data available in the proposed new US ISIN service. In the short term, resolving the case with the European Commission will allow us to refocus our efforts on the value and reinvestment we bring to the financial markets on a daily basis.”
As for the rest of the data vendor community, Purcell indicates that under CGS’ proposed commitments, market data vendors would have the option to subscribe to the new US ISIN service for distribution to any of their EEA customers who do not require the more comprehensive data available as part of a Cusip subscription.
In terms of addressing the issues that have been raised by a number of associations, including German association BVI, the European Fund and Asset Management Association (EFAMA) and the UK-based Information Provider User Group (IPUG), Purcell says: “Our proposed commitments are the result of nearly two years of good faith negotiations with the European Commission. It is our understanding that the market testing period is to allow all interested parties to comment.”
It seems the vendor is awaiting consensus and feedback from the market as a whole, before it addresses the particulars of the criticisms thus far.
On the subject of a potentially unlevel global playing field caused by the moves in Europe, however, he says: “The proposed new US ISIN service is tailored to the unique, regional requirements of a group of end users within the EEA who argued that they neither want nor use the more comprehensive data offered in other CGS services. We anticipate that most global market participants will still want to continue with their existing level of service.”